Are you able to engineer swaps in a single bound, or place bids faster than a sliding rupiah? Can you make a few million and look like you've lost them? Or else maintain a poker face when you really have lost them? Manage all that and you may be on your way to being hired by Citibank to be a currency trader.
And if you do, and do it well, you too can cut a fine figure dressed head to toe in Armani. But getting there isnÆt easy, and tips can help. Here are some: the trendÆs your friend, so donÆt fight it. The market isnÆt intelligent, but your counterparts are. As Robert Prechter once said, ôThe force that drives the stock market is investor mass psychology, not such things as corporate profits, interest rate trends or oil prices.ö And be prepared to shift your focus û your perception about the importance of fundamential influencing factors should change according to circumstances.
But despite all those tips, this reporter still managed to lose the equivalent of a small house in a simulated bourse game run by Citibank. Developed as a training program for Citibank foreign exchange and money market traders, the bourse game not only gives an insight to the life of a trader, but also basic knowledge of the currency and money markets in Asia.
Since 1998, Citibank has offered this training game to journalists to promote a better understanding of the intricacies, whims and favors of the market, not to mention the real life traders. As the saying goes, "I hear and I forget, I listen and I remember, I do and I understand".
And so armed with a head full of spot and forward forex calculations and a position, this reporter bid, sold, lent, borrowed and hedged, or more accurately, procrastinated, begged and stressed for three days with 27 other journalists.
Here is a typical day: It's 9 am, and the news monitor flashes - Markland unionists have called a strike, Markland's coal industry is at a standstill. As the Mark plunges, the dollars I borrowed to buy the Mark suddenly loom larger. "5 yours at 70!" I scream down the phone to the central bank, which acts as a broker. Whilst I have access to buy/sell quotes from the other banks, brokers will typically have the highest bid and lowest offer. I am desperate, and have just sold 5 million Mark at 0.70 Marks to the dollar, having bought them at 0.71. The frenetic pace goes on all day and when the final bell rings signalling the end of close of the markets, there is an audible sigh of relief around the room, notably from me.
But the game hasn't ended yet, I have oversold the Mark, and in order not to incur an overdraft penalty, I have to dabble in yet another market, the overnight money market in order to borrow the shortfall. The days were long indeed.
Want to know the best tip I got? DonÆt give up your day job.